Steven Levitt, author of Freakonomics, talks about the revolutionary ideas of economist Milton Friedman. Friedman, the Nobel laureate who was considered one of the most influential economists of the 20th century, died this week of a heart ailment at the age of 94.

SCOTT SIMON, host:

This is WEEKEND EDITION from NPR News. I'm Scott Simon. Coming up, why an Afghan bazaar is named after President Bush.

But first, Milton Friedman, the Nobel Laureate who was considered one of the most influential economists of the 20th century, died this week of a heart ailment at the age of 94. The University of Chicago professor became the most persuasive advocate for an unfettered free market, which he believed maximized human liberty.

He proposed many ideas that have become accepted, including income tax withholding, a volunteer army and school vouchers, and quite a few that are still debated, including replacing anti-poverty programs with a negative income tax and legalizing marijuana. Maybe that endeared him to his students.

Earlier in his career, Mr. Friedman won the John Bates Clark Award given to an American economist under 40. A more recent recipient of that honor is Steve Levitt, one of the University of Chicago boys of economists who transformed economic thinking.

Professor Levitt is certainly best known as the co-author of the book Freakonomics, and he joins us from Chicago. Professor, thanks very much for being with us again.

SIMON: I keep reading about Professor Friedman, and the two words that I see keep rising to the top - and I want your reaction - is blunt and fun.

Prof. LEVITT: Well, you know, that's absolutely right. He's 55 or 65 years older than I am, so I didn't have that much contact with him until after he turned 90. But even in his 90s, he was a spunky little fighter. I mean he was said to be five feet-three inches tall, though I think that was probably and exaggeration. He was probably was more like five foot-one inch.

But I would say the most telling contact I had with him was when he came to have lunch at the University of Chicago just a year ago. And he was railing against the way the profession had moved, how it had become very mathematical, how few people were doing the kind of simple price theory that he had done in his prime.

And one of the other professors at the lunch said, well, but Professor Friedman, that's the market speaking, the market saying the kind of research you did wasn't that valuable. I have never seen the fire in the eye and in the belly as he fought, you know, just rabidly to defend the research that he'd done.

SIMON: You have both been known as people who showed how economic theory can be applied to a whole range of things, from legalizing drugs to child safety to gun control. Did something he say or something he was help inform and spur your own thinking?

Prof. LEVITT: Well, it's wrong to compare his contributions to mine. Because a difference between him and me is that he really tackled the most fundamental questions in economics about consumption, about the Great Depression. I'm completely trivial. There's no way that anyone should devalue his contribution by comparing him to me.

But the legacy that he left - one was the free market legacy that you talked about. It was really part economics but mostly ideology. And I think within the profession of economics, that's something that many of us have believed but don't really make our research around.

Now, what's really, I think, changed the profession for me is his use of data. So he was an early advocate of taking a theory and going and finding data. His book in the early '60s on the Great Depression was some of the best data collection in economics. And he wrote about how people's consumption was affected by its income back in 1957.

And many people think that's the most masterful study with data that's ever been done. And so for me, I find that his actual methods, the way he thought about applying economics to any question, that's what's inspired me, both directly and through his own students, like Gary Becker, who have really been my mentors.

SIMON: He was called and known as a conservative. He was called and was known as a libertarian. Has the nature of conservative economic thinking changed from his day?

Prof. LEVITT: Well, he was not the kind of conservative - political conservative that you see kind of in the Republican Party now. He was a believer in free markets, and having grown during the Depression, he was also very worried about budget deficits. So he was really an old-style conservative who - a libertarian more than a conservative. He just felt like people could make their own choices and the less government did, the better things would turn out to be.

And the irony of it all is that one of his most important public policy contributions was in institutionalizing withholding during World War II. He was working for the government. He was trying to figure out how to get more tax revenue.

And his act of being involved with automatic withholding probably allowed government to grow more than just about any other feature of the modern tax code. And he's been pretty much ashamed of that ever since, as far as I can tell.

SIMON: Professor Levitt, always a pleasure to talk to you. Thanks so much.

Prof. LEVITT: Thank you.

SIMON: Professor Steven Levitt of the University of Chicago, co-author of Freakonomics.

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